The Market Valuation of Interior Design and Developer Strategies: A Simple Theory and Some Evidence

Charles Leung, Wai Yip Ma and Jun Zhang
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Wai Yip Ma: Chinese University of Hong Kong
Jun Zhang: Chinese University of Hong Kong

International Real Estate Review, 2014, vol. 17, issue 1, 63-107

Abstract: How much do the market values of housing reflect its interior design? Does the interior design interact with other housing attributes? By following recent research based on the ¡§graph theory,¡¨ this paper confirms the importance of internal design variables in a hedonic pricing model, which is applied to a large dataset of high-rise apartment buildings in Asia. The evidence is consistent with a simple theory in that developers strategically use interior design to ¡§dilute¡¨ the effect of location, which leads to a form of endogenous multicollinearity. Directions for future research are also discussed.

Keywords: Endogenous Multicollinearity; Interior Design; Market Valuation; Dummy Variables; Interaction Terms (search for similar items in EconPapers)
JEL-codes: L85 (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (8)

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Working Paper: The Market Valuation of Interior Design and Developers strategies: a simple Theory and some Evidence (2013)
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